Timeshare proposal could cost $170 million in taxes

After the Osceola County property appraiser won a major case against Wyndham timeshares upholding the way it values the company’s resorts, some Florida lawmakers want appraisers to use a different method — a change that could cost cities, counties and schools $170 million a year in property taxes.

The proposal before the Florida Legislature is being pushed by a lobbyist who works for Grande Vista, a 900-unit timeshare in Orlando run by Marriott Vacations Worldwide Corp. It would cut taxes for some of the largest corporations in the timeshare business, including Wyndham Destinations Inc., Hilton Grand Vacations Inc., the Walt Disney Co.’s Disney Vacation Club and Marriott.

It’ll be discussed for the first time Tuesday by state lawmakers in the Senate Regulated Industries committee.

Orange County Property Appraiser Amy Mercado and Osceola County Property Appraiser Katrina Scarborough are both against the bill, which would have the biggest impact in tourism-heavy Central Florida, which has more timeshares than any other part of the state.

In Orange County, timeshares account for more than $9 billion in taxable property value and about $175 million in annual property taxes — money that pays for schools, libraries and parks. In Osceola, they account for $3 billion in taxable property value and generate about $40 million in property taxes.

If the bill passes, Mercado estimated the taxable value of her county’s timeshares — and thus the amount of property taxes they must pay — could plummet between 50% and 70%.

Appraisers defend methods

At issue is to what extent timeshare resales, where an individual owner resells their timeshare to someone else, should be used by appraisers to valuate resorts.

Under current law, property appraisers make the call, depending on if there are enough legitimate resales. House Bill 1007 and Senate Bill 1358 would change that by requiring appraisers to factor those resales in if the owner or developer can provide a “reasonable number” of examples.

But appraisers argue that the prices of resold timeshares are usually far lower than those sold directly by big developers, in some cases because the owners can’t afford them and need to sell quick.

“In researching those sales, we find that most of the time — actually the vast majority of the time — the timeshare owner is wanting to dump it. They’re selling them off eBay to the highest bidder, they’re going to a third-party timeshare resale (company that purchases) them for pennies on the dollar,” Scarborough said. “Most of them, I would say 99% of the sales, are distressed.”

The other problem, Scarborough said, is that there usually aren’t enough legitimate resales to use as comparable sales.

In 2020, for example, Scarborough said there were 10,672 new timeshare sales in Osceola compared to 3,130 resales. The average selling price for the resales was $599; the average selling price for the new sales was almost $19,000.

So property appraisers have instead been setting the property value of timeshares based off new sale prices.

Additionally, the proposal doesn’t say how many resales are needed. It only says there must be an “adequate” or “reasonable” number.

The appraisers who oppose the bill are concerned that’s too ambiguous and could be misinterpreted so resales are used even if they only make up a small percentage of the county’s timeshare sales.

Matthew Moore, chief economist for the Florida Department of Revenue, in his report on the bill, agreed that one resale could be argued as “adequate” and acknowledged that many resales involve distressed sellers. Appraisers likened it to valuing a neighborhood full of expensive homes based on the sales prices of a few foreclosures.

Some critics also said incorporating those resales calls into question why two otherwise identical timeshare units could be sold for such wildly different prices — based solely on whether it’s sold directly by the developer or by an individual owner on the resale market.

“It would be a ‘have your cake and eat it, too,’ ” said Dana Blickley, the property appraiser in Brevard County who also opposes the bill. “I want to have it at the higher price but taxed at the lower price.”

One of the lawmakers supporting the bill in the Legislature, Republican Rep. Randy Fine of Brevard County, sees the situation differently. He said that appraisers are inflating the taxable values of timeshares and he’s looking out for residents who own timeshares.

Fine and the lobbyist behind the bill, former South Florida Republican state Rep. Ellyn Bogdanoff, argued that the free market should drive the value. “If people don’t want timeshares anymore, then they’re not worth what they’re worth, are they? If (people) don’t think it has value, then that’s its value,” Bogdanoff said. “